Phone wars

The year was 1991. A couple of reporters were gathered in a small suite at the Delta Hotel on New Gower Street in St. John’s.

Before long, Newfoundland Telephone CEO Vince Withers strode into the room and presented his case for maintaining a monopoly on phone services in Newfoundland. He said the company has to charge higher rates for long-

distance to subsidize the cost of providing service to remote areas. Otherwise, he said, base rates would have to go up.

But it was a lost cause.

Within a year, the CRTC had granted independent telecommunications firms the right to use the existing infrastructure of Canadian telephone companies to provide long-distance

services.

Unitel Communications was the first to set up shop. The age of competitive phone service had arrived.

Well, times have changed, in a big way.

And the irony is inescapable.

Canada’s telecommunications industry is now dominated by what media have dubbed the Big Three.

Between them, BCE (Bell), Rogers and Telus have cornered 90 per cent of the market.

In recent weeks, they have acted as a cartel, warning Canadians through editorial board interviews, commentary and a sizable advertising campaign that the country is under threat by an American invader.

Verizon, the giant U.S. provider, had shown interest in what’s called a spectrum auction for a piece of the Canadian cell data market.

If they decided to bid, they could take advantage of federal regulations designed to protect little fish from the big fish — the Big Three are barred from taking over smaller startup companies.

The Big Three say that “loophole” gives the U.S. giant an advantage. What they don’t point out is that the playing field is hardly even right now.

As Postmedia’s Andrew Coyne wrote Thursday, “It’s not a ‘loophole’ to prevent an industry that is already greatly concentrated from growing still more concentrated.”

Verizon decided Thursday to delay its bid, but even if it had bought out the two troubled firms it was looking at, it would only start with three per cent of the market.

Canadian consumers will not be easily convinced by nationalistic appeals.

They know they are being gouged, even with three major competitors. The Canadian industry exists in a bubble, in a world where many other countries enjoy less costly service.

The federal government has already taken steps to mitigate this. Earlier this year, it clamped down on exorbitant roaming fees and lengthy contracts.

This is the sort of shakeup consumers want.

Protectionism is a common thread in Canadian politics, particularly when it comes to precious natural resources.

But the only things the Big Three are trying to protect are their own thick wallets.

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Keanman

August 16, 2013 - 16:13

Steve just wants to give the illusion that the government is trying to improve standards for Canadians. What we all know is that we will have to pay more over a shorter period of time. The big 3's wallets will be just as fat as ever. Open the market Steve. Bring in some real competition.